Morrisons enjoys lockdown sales boost, but sees fuel and costs hit

The Bradford-based chain reported a 5.7% rise in group like-for-like sales, excluding fuel, in the 14 weeks to May 10.

Supermarket Morrisons has posted surging retail sales over a “volatile” first quarter, but revealed a hit from plunging fuel demand amid the coronavirus lockdown.

The Bradford-based chain reported a 5.7% rise in group like-for-like sales, excluding fuel, in the 14 weeks to May 10.

It said group sales jumped 10.8% over the last two weeks of the quarter, with a 9.6% contribution from retail and 1.2% growth in wholesale.

But with tumbling sales on its forecourts included, group sales were 3.9% down in the quarter.

Morrisons said fuel like-for-like sales have crashed around 70% since the UK went into lockdown in late March as Britons have been forced to stay at home.

Morrisons said that the fuel hit and temporary move to close its in-store cafes, as well as surging costs of protecting staff and adapting its business, are likely to weigh on profits over the first half.

The firm cautioned the outlook of the impact of coronavirus remains “uncertain”, though it stopped short of warning over full-year profits.

It added that higher costs from coronavirus are likely to be offset by £228 million in savings from the business rates relief, while it expects fuel sales to bounce back strongly once lockdown begins to end.

Shares lifted 3%.

David Potts, chief executive of Morrisons, said: “We are facing into the unprecedented current challenges and are playing our full part to help feed the nation.”

Mr Potts added that face masks are seen as “optional” choice for staff, though he stressed it has enough masks, gloves and visors for the entire workforce if needed.

The group has been focusing on meeting soaring demand for home deliveries and has more than doubled its online slots through a significant increase in stores available for order picking, and is launching a new click-and-collect service at nearly 280 stores by mid-June.

Its Morrisons store on Amazon Prime Now is also going nationwide, increasing from 17 stores to over 40 in the coming weeks, while it has also launched a telephone order doorstep delivery service and a partnership with Deliveroo to courier food from 130 stores.

The group also launched the latest of its home delivery food boxes, with a British Farming Food Box costing £45 in a move to help support UK farmers struggling since the closure of many restaurant and hotel customers.

Clive Black, at Shore Capital, said Morrisons had “emerged from a tumultuous first quarter in good shape”.

He said: “Learning has been rapid, the group has been agile in the face of volatility but also exceptionally innovative and purposeful, so meeting the demands of a nation coming to terms with coronavirus.

“Indeed, we believe that the wholehearted effort of Morrisons is resonating well with all stakeholders and whilst trade is boosted by channel shift, there could be ongoing benefits to the business in what are likely to be tough economic periods ahead.”